Iowa’s open dialogue and stable environment a ‘draw’ for insurers

Iowa is perceived by other states as a model in terms of the number of companies domiciled in the state and those wanting to do business there, as well as having a very stable legislative and regulatory environment. But Iowa has faced other challenges in the last year including deciding where to the draw the line on gift give-a-ways by companies and broker groups and in handling the aftermath of major windstorms, flooding and tornadoes

In addition, Iowa Insurance Commis-sioner Susan Voss has been busy addressing agent licensing and market conduct exam initiatives through her involvement in the National Association of Insurance Commissioners’ committees.

Iowa has some of the lowest rates in the country and it continues to grow with the number of companies wanting to do business in this great Midwestern state. In this interview with Insurance Journal‘s Andrew Simpson, one of 15 with regulators at a recent meeting of the NAIC, Voss explains why.

When you speak to other states that want to attract more insurance jobs, they always point to Iowa. What is Iowa’s secret?
Voss: I don’t think it’s in the water, but I think it’s a historical balance between regulation and the free market. Insurance is now the second largest industry in our state and so there’s a feeling from most regulatory agencies and our legislators that you want to keep companies here and grow with them. Regulators and legislators want and have an open dialogue that offers companies a very welcoming feeling.

One the issues that other states have dealt with is brokerage compensation and disclosure. Has this been a problem in Iowa?
Voss: No, we’ve really been very fortunate. When former Commissioner Terri Vaughan was the commissioner she actually brought in the major brokerage firms in Iowa and they had an open discussion about what they were seeing in the market. I think we determined, internally, there was not an issue that needed to be dealt with, so we’ve done nothing.

To be clear, there has been no regulation or legislation passed?
Voss: Nothing.

There is some current controversy about what a rebate is. Can you give us an update on that?
Voss: Lately, we’ve been getting a series of calls about certain sales practices both in the agent community and in the insurance community about what a rebate is, what kind of incentives or gifts or additional products can be provided with an insurance policy, and still be considered “above board.”

We’re seeing a lot of creative types of incentives or products, and we’re not just sure where the line is. We have a pretty vague statute. To address the issue we are planning a hearing, inviting everyone in to talk about it and, hopefully, come up with some good resolution.

We’re not interested in fining people or going to some kind of regulatory action, we want this to be an open, free discussion. People can tell us what’s going on. Then let’s go forward and find a good solution for everybody.

What appears to be the sensitivity around rebates? How could rebates be some kind of violation?
Voss: The statute just says that you can’t have any kind of sales inducement to buy a product. What we are seeing is offers of free memberships and reductions on certain other types of products you might buy, such as Lasik surgery or a new truck.

I think we want to encourage people to buy coverage, but where does it cross the line when you are truly trying to provide some kind of a gift above and beyond? People are calling us and wanting some kind of guidance. We’re just a little stumped on where that line it is. Is it okay to give a calendar, but it’s not okay to give a free membership to a gym or other types of sales incentives?

Many other states are dealing with property insurers pulling back from marketplace and I am wondering if Iowans have felt the effects of that?
Voss: Not really. We have had some tough years because of tornadoes, wind and hail. Some of our county mutuals and smaller companies have had concerns, but it’s been a good year. The companies are strong, we have the lowest auto rates in nation and we’re not seeing anything of grave concern in the property casualty area.

You mentioned a few natural catastrophes. How do Iowans feel about a national catastrophe plan?
Voss: I think that when we look within our own state and the issues that we have, wind and hail, tornadoes, we see huge problems. I think Iowans would be sensitive to looking at something the whole nation can review because, whether we want to admit it or not, whenever there is a natural catastrophe, somehow the citizens, through government, are going to have to pay something to assist consumers. I think any kind of national discussion would be welcomed. Maybe we can’t come up with a national resolution, but let’s get something out on the table to foster a real awareness.

Does Iowa hear complaints or concerns about health insurance and if so what are the initiatives that are suggested?
Voss: I think our biggest stress mark is the small employer, with two to 50 employees. Last summer we put together a group of agents and insurance companies to craft some ways that we could address some of our small employers’ concerns. Those suggestions were brought to the legislature. The legislature was a rather contentious one this session, and so nothing was resolved.

We are now going into a gubernatorial race this fall and it is going to be another important issue to discuss. I’m am planning to convene the group we worked with last year to come back together, put their thoughts together again, look at what we brought forth last year. I want to have something ready for next session to present to the legislature and to the new governor about how to curb the stresses in the health insurance market where we get complaints.

Do you receive many health insurance related complaints?
Voss: Yes, a lot of the complaints are from the small employer market.

What issues are you involved in at the National Association of Insurance Commissioners?
Voss: I chair the D Committee, which is the market regulation and consumer affairs group. We are trying to streamline market regulation of insurance companies and work with uniformity in agent licensing. I’m really focused on states working together on market conduct issues. Instead of six states doing six different market conduct exams on one company, let’s have one do it and all work together.

Topics Catastrophe Carriers Legislation Agencies Iowa